GM announced earlier this month a plan to lay off 6,000 workers next year along with the potential closings of five plants, including its Detroit/Hamtramck and Warren Transmission plants.

Automotive suppliers are facing a crisis of confidence heading into 2019.

The business is currently performing well but a greasy fog of pessimism is enveloping its leaders as sales begin to slow and the White House's trade disputes rage on.

The Original Equipment Supplier Association's Automotive Supplier Barometer, a quarterly survey meant to measure the anecdotal outlook for industry, fell to its lowest level in years recently. The barometer, which surveyed 102 companies between Oct. 24 and Nov. 16, dropped to 39, the lowest level since the 2011 9.1-magnitude earthquake and subsequent tsunami struck the northern coast of Japan and cut off the parts supply of dozens of plants.

The months following the Lehman Brothers collapse during the Great Recession in 2008-2009 were the only other time the barometer was lower.

But you wouldn't know it from the way the business is going now.

Yet the industry is in the midst of a glut of program launches, with dozens of new and refreshed vehicle models launching. And suppliers remain in a hiring frenzy for newer, better skills despite the gloom hanging over the industry.

"What we're seeing coming through is the worry of the unknown," said OESA CEO Julie Fream. "It's the accumulation of all the unknowns that is creating this uneasiness in the marketplace, and that's creating volatility."

Photo

Julie Fream: Industry worried about unknown.

The volatility suppliers are worried about is coming from the White House around trade, according to the survey results. Roughly three-quarters of those surveyed say changes in trade policy are the greatest threat to the industry over the next 12 months.

President Donald Trump continues to threaten a 25 percent tariff on imported vehicles, under the guise of a national security threat, in an attempt to force more domestic production. A 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum were implemented in March and continue to plague industry bottom lines.

An early projection by LMC Automotive forecast those tariffs to cut U.S. auto sales by 2 million vehicles, though that's yet to be seen. General Motors Co. and Ford Motor Co. have both said the steel and aluminum tariffs have shaved $1 billion from profits this year.

Compounding the supplier sector's problems is the hard shift away from sedans in the U.S. by domestic automakers — Ford and GM are both ending most car production for the U.S. market in the coming years. Sprinkle in slowing sales in the U.S. and an unexpected sales slump in China — auto sales fell 11.6 percent in September, the largest drop in seven years — and the worries add up.

But this hasn't slowed the entire industry's demand for more skilled workers as it looks to increase electrification and autonomous vehicle efforts.

"We've seen this bipolar nature of the modern auto industry play out all year," said Mike Wall, director of automotive analysis for Southfield-based IHSMarkit. "The macro tells one story, a weakening in China, tariff and trade issues, problems in Europe, etc. but they also don't have the right labor and staffing. There are storm clouds gathering, certainly, but these companies also need to prepare where they want to take their companies in the next 10 or 15 years, and that takes new labor and talent."

Photo

Mike Wall: Sees bipolar nature in industry.

This is evident across the entire manufacturing sector, not just automotive, as job openings for U.S. manufacturers reach 4 percent in October, according to Labor Department data. That's the highest job openings per filled jobs rate since 2000. There were roughly 332,000 open manufacturing jobs in October, compared to about 8 million total jobs.

Roughly 60 percent of the suppliers survey for the OESA Barometer said they have a moderate to wide gap in skills within their organization and nearly all of them have a desire to rectify that problem. Most are adapting skill sets internally, i.e. training employees for future jobs, while others are reorganizing their workforces like their automotive customers.

GM announced earlier this month a plan to lay off 6,000 workers next year along with the potential closings of five plants, including its Detroit/Hamtramck and Warren Transmission plants. Yet it continues to hire in areas of electrification and autonomous vehicles as part of its future strategy — the company has more than 200 job openings at its San Francisco autonomous-driving operation.

Photo

Glenn Stevens: Suppliers deal with pressures.

This is evident in the workers suppliers need most, according to the study. Of those surveyed, 80 percent indicated engineering talent as the most critical shortage, followed by hourly skilled-trades workers.

"All these changes at the automakers are the primary drivers for suppliers to follow suit," said Glenn Stevens, executive director of Michigan's auto industry promotion effort MichAuto and vice president of automotive and mobility initiatives at the Detroit Regional Chamber. "Like the (automakers), these suppliers, who by the way make 77 percent of the components in a vehicle and own 50 percent of the intellectual property, are dealing with external pressures, too, but also with the need to change."